The reason we permanently suspend players is because they either exhibit the potential to do something really terrible, or because they go an extended period of time creating pain for others and show no interest or ability to reform.
The idea behind reform is to help a player understand that what they're doing is damaging to others, and simply taking away chat completely doesn't solve this because they fail to put into practice their understanding of what is right/wrong. Chat restrictions in their current form are pretty good at this because you have to think more often about the most effective use of your chat; do I want to use my limited chat to work towards winning/helping, or to harass?
To make my point clear, in the game for which you were permanently suspended you were also threatening to feed the enemy team. Removing chat privileges altogether likely would not have prevented you from continuing to cause pain.